Strengthening Ireland’s R&D Tax Credit for Growth

Ireland’s R&D tax credit has been a cornerstone of Ireland’s ability to attract high‑value investment, sustain skilled employment and build a strong innovation ecosystem since its introduction in 2004. However, the competitive landscape for attracting R&D investment has become greater and there is a need to continually review our R&D and other incentives and introduce enhancements to encourage growth through additional high value investment.

PwC’s response sets out a practical agenda to future‑proof Ireland’s incentives across the full innovation lifecycle - supporting core R&D activity, strengthening the link to IP retention and exploitation, and broadening support for innovation in areas such as digitalisation and decarbonisation that may not fall within traditional R&D definitions.

Client feedback highlights what is at stake: 65% of surveyed respondents indicated that, without the R&D tax credit, their R&D activity in Ireland would be less than 50% of its current level, underlining the credit’s critical role in maintaining Ireland’s R&D footprint. The credit needs to evolve in line with evolving R&D activities and structures to ensure that this impact to anchoring and growing R&D continues.

Our submission outlines a number of proposals for enhancements to the R&D regime. This includes an increase in the headline rate to 35% which materialised in Finance Act 2025 last December. Other proposals in our submission included modernising the rules for capital investment so genuine investment in R&D capital infrastructure is better supported, broadening the scope of qualifying expenditure to include key costs incurred for the purposes of R&D and improving flexibility for subcontracted R&D to reflect modern, globally distributed R&D delivery models.

It also argues that Ireland’s IP incentives require reform to maximise their effectiveness (particularly given Pillar II QRTC and more recent Qualified Tax Incentives -QTI provisions). Proposals in our submission included a supplemental refundable credit to encourage IP developed through Irish R&D to be retained and exploited in Ireland, anchoring higher‑value decision‑making and commercialisation activity domestically. At the time of the submission, the QTI provisions were not released, however, these should now introduce further flexibility in improving the effectiveness of our IP incentives.

Finally, the response calls for a dedicated innovation tax credit to support investment and activity in fast‑growing priority areas such as digital transformation and green technologies, ensuring Ireland can capture opportunities from market disruption while supporting sustainable growth and long‑term competitiveness.